Churning out Chrysler, Jeeps at Belvidere

Tuesday

Jul 24, 2007 at 12:01 AMJul 24, 2007 at 2:21 PM

Alex Gary

Chrysler’s massive re-engineering of its Belvidere plant earlier this year has helped put workers on pace to set a production record.

June’s production total of 33,344 Dodge Calibers, Jeep Compasses and Jeep Patriots was the highest single month ever, and the plant is on track to assemble more than 355,000 for the year. That would easily break the plant’s prior record of 335,298 Plymouth Horizons and Dodge Omnis built in 1986.

To be fair, just two shifts of workers turned out the Horizons and Omnis compared with the three shifts working now. Still it’s a significant milestone. But it’s not just the sheer numbers of cars and small SUVs produced showing that Chrysler is reaping the rewards of its $419 million investment at the end of 2005.

Avoiding shutdowns

True to the original plan, Chrysler has been tweaking the monthly production mix of the Caliber, Compass and Patriot without having costly long-term shutdowns at the 3.9 million-square-foot operation.

The Chrysler plant is the largest manufacturing employer in the Rock River Valley.

"I would say so far the investment is paying off. The fact alone they can make three different kinds of vehicles there now in itself is a major thing for the plant’s future," said Catherine Madden, senior automotive analyst for Massachusetts-based market research firm Global Insight.

Fully automated

The company’s investment included adding hundreds of robots to the body shop, which is now fully automated, allowing workers to switch production of models seamlessly.

A look at the monthly production figures shows Chrysler officials appear to have found a comfortable level for the Dodge Caliber, which was the first launched of the three, while they are still searching for the right mix for the two Jeeps.

Since turning out 18,714 Calibers in January, Chrysler lowered the production of the combination sporty coupe/SUV four of the next five months. Through July, dealers have sold nearly 71 percent of the Calibers that have been built since the car went into production in January 2006.

In the last two months, worldwide sales of the Caliber have actually been higher than the number of cars coming out of the plant as dealers dipped into inventory. Statistics show dealers have about a 44-day supply of Calibers; anything under 50 days is considered very good.

Patriot passes Compass

"Optimally, there is always that 1-to-1 ratio," Madden said. "You build it and you want to sell it as quickly as possible. The numbers show Calibers are still moving at a good clip, and Chrysler won’t be in a precarious position of having to offer big incentives to clear them out at the end of its model year."

Much of the reduction in Caliber production has been picked up by the Patriot, which went into production this January. June’s Patriot production total of 12,190 is its highest yet, and workers now have built more Patriots in 2007 than Compasses.

Patriot sales aren’t taking off as quickly as they did for Caliber but already have topped the Compass in the U.S. the past two months. Strong international sales of the Compass have kept it slightly ahead of the Patriot worldwide.

"The Patriot’s days on lot is around 65 days. That’s a good level," Gardner said. "The Patriot’s sales have consistently been increasing, and it has a good traditional Jeep look that’s gotten good reviews."

One curious thing from the numbers. In June, Chrysler increased Compass production for the second straight month after having cut it the prior six months. Officials have upped Compass output despite the fact sales declined in June and have been essentially flat since December. Dealers have an average supply of 113 days on lot for the Compass, which has a rounder look than the traditional boxy Jeep design and has been marketed more toward women than any of the other Jeep models.

Madden said Chrysler may be experimenting with the different Compass configurations.

"My suspicion is that they can’t move what they’ve distributed to dealers and are adjusting based on different orders," Madden said.

Still, even the slowness of the Compass illustrates how the reconfigured plant helps the company. Before the 2005 renovation, if inventory of a model built up too high the company’s only recourse was to idle the plant.

"In the past, they might have had to take a down week, and that’s expensive because the company continues to pay workers not to work," Gardner said. "The good news here is the plant can keep running as long as two of the models are doing well, and the numbers look good for the Caliber and Patriot."

Assistant Business Editor Alex Gary may be reached at agary@rrstar.com or at 815-987-1339.

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